Doctors go on march

SANTA ANA - About 40 physicians marched Thursday from Western Medical Center-Santa Ana to the nearby headquarters of the hospital's owner to demand another seat on the company's board of directors and express other concerns.

The physicians included three board members of Integrated Healthcare Holdings Corp., which owns four hospitals in central Orange County. After their brief march, the group met for about an hour with two other members of the six-member board.

The events were an outgrowth of IHHI's contentious acquisition two years ago of the four hospitals from Tenet Healthcare Corp. Physicians complain that IHHI is undercapitalized and hasn't made needed investments in new equipment for the hospitals. They are also upset at what they called retaliation against a doctor who spoke out about the company's finances.

"The management staff at IHHI has failed to follow through on their commitments to the medical staff at IHHI hospitals," said Dr. Ajay Meka, the chairman of IHHI's board and the organizer of Thursday's march and meeting.

The targets of the physicians' ire are Bruce Mogel, IHHI's chief executive and the only board member not present at Thursday's meeting; and Larry Anderson, IHHI's president.

"We think a lot of what's going on is pretextual," said David Robinson, an attorney representing Mogel and Anderson. "What's really going on is we have a dispute about money."

In 2005, Mogel and Anderson engineered a $70 million purchase of the four hospitals, using mostly loans, plus investment money put up by doctors, including Meka and Dr. Anil Shah, a Santa Ana cardiologist. The main loan, from Medical Capital Corp. of Anaheim, carried an interest rate of 14 percent, twice the prime rate at the time.

The physicians complain that IHHI has spent too much money on interest payments to Medical Capital, at the expense of investments in the hospitals.

That complaint appeared to find a receptive audience in the two independent board members, Fernando Niebla and Maury DeWald.

"We're all painfully aware that we're somewhat undercapitalized, and we're in the process of refinancing," Niebla said. "We're trying to get refinancing on better terms. For a million reasons, it hasn't happened."

Niebla said he would like to add one or two more independent directors to the board, but "the loan agreement prevents that from happening."

The company says it has invested $4 million in new equipment for Western Medical Center-Santa Ana, including a nuclear camera for cardiac monitoring and other tests.

Another aspect of the dispute concerns lease payments on the hospitals, Anderson said. Doctors who invested in IHHI own a majority stake in the land on which three of the company's four hospitals sit. The doctors want more money under the lease agreements, Anderson said.

The doctors remain upset about the treatment of Dr. Michael Fitzgibbons, a former chief of staff at Western Medical Center-Santa Ana. After the sale by Tenet, he sent e-mails to other doctors expressing doubts about IHHI's financial viability. The company sued him for defamation and lost.

"Our responsibility is to stand up for our patients … but we're afraid to do so for fear of what happened to Michael Fitzgibbons," said Dr. John Luster, chief of staff at Chapman Medical Center in Orange, another of IHHI's hospitals.

The turnout for Thursday's march was lighter than organizers had expected. Meka had said earlier he hoped 100 physicians would show up.